Why Osborne's new lending scheme won't work

If consumers are determined to hoard cash, who will borrow?

The likelihood is that George Osborne's new bank lending scheme, announced last night in his Mansion House speech, will neither revive the economy nor the Tories' moribund poll ratings (they currently trail Labour by 12 points).

Osborne has always said that he and David Cameron are "fiscal conservatives but monetary activists" and more monetary activism is what we're getting. Under a new "funding for lending" scheme, worth up to £80bn, the Bank of England will provide cheap loans to banks for several years, at below market rates, in exchange for them lending the money to households and small and medium-sized businesses. In addition, the snappily-titled Extended Collateral Term Repo Facility will lend banks a minimum of £5bn a month in the form of six month loans to them. The aim of both schemes is to stimulate the economy by increasing loans to credit-starved businesses and households. But will they work? Almost certainly not.

There is increasing evidence that the UK is caught in a liquidity trap, a situation in which confidence is so low that looser monetary policy (e.g. increasing the money supply or lowering interest rates) has no positive effect on the economy. If consumers and businesses are determined to hoard cash (as is common in a recession), then the new loans will not be taken up. As for those willing to borrow, many are so indebted that the banks won't lend to them anyway. Put simply, the creditworthy won't take loans and the uncreditworthy won't get them.

It is in such circumstances that the government must act as a spender of last resort and engage in fiscal stimulus (higher spending and lower taxes), as Ed Balls has repeatedly argued. Since Osborne is so fond of boasting of the UK's historically low bond yields (although they owe more to the Bank of England's quantitative easing programme than to his deficit reduction programme), the least he could do is take advantage of them. He should increase borrowing to fund higher infrastructure spending (the most effective stimulus, according to the Office for Budget Responsibility) and tax cuts.

As for the politics, they're not great for Osborne either. As Tory MP Douglas Carswell, an increasingly vociferous critic of the Chancellor, noted on Twitter: "Print-money-and-give-to-banks (govt) V Print-money-and-give-ppl (Balls). Guess which will play better in studio debates?"

In a recent essay in the New York Review of Books, Paul Krugman sagely observed that "the economic strategy that works best politically isn’t the strategy that finds approval with focus groups, let alone with the editorial page of The Washington Post; it’s the strategy that actually delivers results." If Osborne wants to restore his political reputation (he is both Chancellor and the Tories' chief election strategist) and give the Tories a faint hope of forming another government, he should adopt a plan that works. But first he must learn the lesson of the 1930s - you can't cut your way out of a recession, but you can spend your way out of one. And in these depressed times, only big government has the firepower to do so. 

Chancellor George Osborne delivered his annual Mansion House address last night. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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How “cli-fi” novels humanise the science of climate change

The paradox is that the harder climate-fiction novels try, the less effective they are.

When the Paris UN Climate Change Conference begins at the end of November, the world’s leaders will review the climate framework agreed in Rio in 1992. For well over 20 years, the world has not just been thinking and talking about climate change, it has also been writing and reading about it, in blogs, newspapers, magazines – and in novels.

Climate change fiction is now a recognisable literary phenomenon replete with its own nickname: “cli-fi”. The term was coined in 2007 by Taiwan-based blogger Dan Bloom. Since then, its use has spread: it was even tweeted by Margaret Atwood in 2013:

It is not a genre in the accepted scholarly sense, since it lacks the plot formulas or stylistic conventions that tend to define genres (such as science fiction or the western). However, it does name a remarkable recent literary and publishing trend.

A 21st-century phenomenon?

Putting a number to this phenomenon depends, partly, on how one defines cli-fi. How much of a novel has to be devoted to climate change before it is considered cli-fi? Should we restrict the term to novels about man-made global warming? (If we don’t, we should remember that narratives about global climatic change are as old as The Epic of Gilgamesh and the Biblical story of the flood.) If we define cli-fi as fictional treatments of climate change caused by human activity in terms of setting, theme or plot – and accept there will be grey areas in the extent of this treatment – a conservative estimate would put the all-time number of cli-fi novels at 150 and growing. This is the figure put forward by Adam Trexler, who has worked with me to survey the development of cli-fi.

This definition also gives us a start date for cli-fi’s history. While planetary climatic change occurs in much 20th-century science fiction, it is only after growing scientific awareness of specifically man-made, carbon-induced climate change in the 1960s and 1970s that novels on this subject emerged. The first is Arthur Herzog’s Heat in 1976, followed by George Turner’s The Sun and the Summer (published in the US as Drowning Towers) in 1987.

At the turn of this century, Maggie Gee and TC Boyle were among the first mainstream authors to publish climate change novels. In this century, we can count Atwood, Michael Crichton, Barbara Kingsolver, Ian McEwan, Kim Stanley Robinson, Ilija Trojanow and Jeanette Winterson as major authors who have written about climate change. The past five years have given us notable examples of cli-fi by emerging authors, such as Steven Amsterdam, Edan Lepucki, Jane Rawson, Nathaniel Rich and Antti Tuomainen.

Creative challenges

Cli-fi is all the more noteworthy considering the creative challenge posed by climate change. First, there is the problem of scale – spatial and temporal. Climate change affects the entire planet and all its species – and concerns the end of this planet as we know it. Novels, by contrast, conventionally concern the actions of individual protagonists and/or, sometimes, small communities.

Added to this is the networked nature of climate change: in physical terms, the climate is a large, complex system whose effects are difficult to model. In socio-cultural terms, solutions require intergovernmental agreement – just what COP21 intends – and various top-down and bottom-up transformations. Finally, there exists the difficulty of translating scientific information, with all its predictive uncertainty, into something both accurate and interesting to the average reader.

Still, cli-fi writers have adopted a range of strategies to engage their readers. Many cli-fi novels could be classified as dystopian, post-apocalyptic or, indeed, both – depicting nightmarish societies triggered by sometimes catastrophic climate events. A future world is one effective way of narrating the planetary condition of climate change.

Some novelists are also careful to underpin their scenarios with rigorous climatic predictions and, in this way, translate science fact into a fictional setting. Kingsolver, who trained as an ecologist, is the best example of this – and Atwood and Robinson are also known for their attempts at making their speculations scientifically plausible. Also, cli-fi novels, particularly those set in the present day or very near future rather than in a dystopian future, tend to show the political or psychological dimensions of living with climate change. Readers can identify with protagonists. To some extent, the global community is represented in fictional everymen or everywomen. Or, often, it is through such characters that science is humanised and its role in combating climate change better understood.

Can cli-fi lead to change?

Could cli-fi affect how we think and act on climate change? The paradox is that the harder cli-fi tries, the less effective it is. Many writers want to inspire change, not insist on it: the line between literature and propaganda is one that most novelists respect. Literature invites us to inhabit other worlds and live other lives. Cli-fi at its best lets us travel to climate-changed worlds, to strive there alongside others and then to return armed with that experience.

In Paris, the UN will seek a global agreement on climate action for the first time in more than 20 years. There is plenty of climate change fiction out there to help provide the mental and psychological space to consider that action.

The Conversation

Adeline Johns-Putra, Reader in English Literature, University of Surrey

This article was originally published on The Conversation. Read the original article.